Category Archives: Money

America Remains World’s Top Energy Producer

America #1 energy producerBank of America reports that the United States will remain the world’s top energy producer this year and for some time to come despite the current administration’s attempts to curb energy exploration and transportation.

President Obama has done everything within his power (and some things not so within it) to suppress American energy production. As Bank of America reported, America’s energy producers have refused to give in.

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.

Questionable regulations and preventing the completion of the Keystone XL pipeline have been top priorities of the Obama administration while millions of Americans struggle to put a full tank of gas in their vehicles or pay other energy bills. Thanks to American energy producers, things have been kept at least survivable. BofA’s head of commodities research said that “the shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”

Unfortunately, despite the best efforts of American producers, President Obama’s failures in the middle-east are keeping gas and energy prices artificially high.

“The shale production story is bigger than Iraqi production, but it hasn’t made the impact on prices you would expect,” said Blanch. “Typically such a large energy supply growth should bring prices lower, but in fact we’re not seeing that because the whole geopolitical situation outside the U.S. is dreadful.”

One way or another, it would seem that we will see energy prices “necessarily skyrocket.”

HuffPuff Propagandizes a FOX Reality

I go through the headlines and news stories in over one-hundred publications daily. I do this so that I can view multiple sources on some of the same stories. Doing this allows me to formulate what is fact and what is disingenuous spin; propaganda meant to trick the public into thinking one way instead of another. Make no mistake, both ideological prospective do it. It’s the art of modern political war. But the Progressive Left has myriad vehicles to attack the ideological Right, where the Right has many fewer (thank you uber-stingy money people on the Right).

A perfect example of the Left’s disingenuous attack on the Right’s information sources comes in an article in the Huffington Post by Jack Mirkinson titled, FOX News Really Doesn’t Want to Talk About the Good Jobs News, where he writes:

“Quick! Can you find Fox News’s coverage of the latest job figures?”

He includes some main page screen shots.

“Still can’t find them? OK, we’ll help you out. What if we zoom in?…OK, OK, we’ll show you! The link is that little one right in the corner there…For some reason, FOX News appears to want to downplay the very good job numbers. For good measure, the network also downplayed the figures on its airwaves as well.”

He then goes on to show how the far-Left mainstream media outlets dutifully took the Obama Administration’s spun numbers touting them as miraculous by supplying one – one – example: a screen shot of CNN’s breaking news on the numbers.

The good numbers that Mr. Mirkinson points to are the BLS statistic that 288,000 jobs were created last month. Is that good news? Yes. Is it the miraculous news Mr. Mirkinson suggests? No.

Throughout the Obama Administration the majority of the jobs “created” have been either service industry jobs or part-time jobs. College graduates remain woefully under-employed and those experienced in the workforce who have been downsized or otherwise screwed out of a job find it almost impossible to find work. And if you are over 50 and have been out of work for a period of time, you might as well come to grips with the fact that you have become unemployable under Mr. Obama’s economy.

Where the Obama Administration and its sycophants want everyone to believe that the creation of 288,000 jobs is the greatest news since sliced bread, the facts remain…and they are not good.

▪ The U3 unemployment rate hovers at 6.1%. The U3 rate measures the unemployment of people who are without jobs and who have actively been looking for work within the past four weeks.

▪ The U6 unemployment rate hovers at 12.1%. The U6 rate reflects “discouraged workers,” or those who have stopped looking for work because current economic conditions make them believe that no work is available for them; “marginally attached workers,” or “loosely attached workers,” or those who “would like” and are able to work, but have not looked for work recently; and part-time workers who want to work full-time, but cannot due to economic reasons.

▪ The Labor Force Participation Rate is stuck at 62.8%.

These statistics mean that in a country of 318 million legal citizens, 92.2 million eligible for employment are without work. Almost one-third of the population is unemployed.

Further, the rate of those not in the labor force has exploded since 2000. Over the past 14 years – and predominantly during the Obama years – we have removed 14,022,376 from the labor force who are eligible to work. That’s over 1 million eligible workers removed from the workforce each year, on average.

So, understanding the reality behind the unemployment data – disingenuously termed the “jobs numbers” by the talking heads, when more accurately they should be referred to as the “jobless numbers” – how can anyone celebrate the creation of 288,000 menial and part-time jobs when we add one million people a year on average to the under- and unemployed demographic?

The American free-market Capitalist system is the only economic system to have ever – ever – created a Middle Class in the history of man. In its purest form it made the United States of America not only the world’s preeminent superpower, it made the United States the “land of opportunity.” Today, that is hardly the case. The Middle Class is disappearing are a rapidly increasing rate and opportunity is disappearing from our economic lexicon. Why, you ask? The answer is simple: the government manipulation of the American free-market Capitalist system.

Special interests in government have saddled the small business sector with an overwhelming number of regulations, while newer and more intrusive mandates continue to smother the job creators, literally stealing food from the mouths of the hungry in the form of disappearing opportunity.

Obamacare, environmental zealotry, socialism in the form of labor union oppression, manipulation of free commerce, all of these economy-stunting and job-killing maladies are introduced into the American free-market Capitalist system by government and the big-money, well-organized special interest groups that see success and American exceptionalism as a cancer, not a cure. Sadly, today, these creatures of negativity and societal destruction are in power…and on both sides of the governmental political aisle. Unless we shift the political paradigm radically back towards true limited government, it is only a matter of time before our Republic is lost.

So, Mr. Mirkinson, the jobs news is good? Please. The jobs news sucks.

As we celebrate the 238 anniversary of the Declaration of Independence, we should all be willing to look at the chains upon our wrists and ankles. We have allowed ourselves to become slaves to an oligarchic elite and their special interest benefactors. They feign concern about unemployment as they try to tell you they are just like us. That couldn’t be further from the truth. Case in point: Mrs. Clinton’s comment about being “flat-broke” when she and the former President left the White House. How does someone who is flat-broke acquire a multi-million dollar mansion in Chappaqua, New York and maintain two “summer cottages” in Ireland being flat-broke? It’s a lie, and one meant to deceive.

The good news it this. We can remove those chains and get back to good. We can free ourselves of the disingenuous and elitist oligarchs with which we are currently saddled. We have the power and it is a power that begins with the ballot box and navigates the seas of prosperity through limited government.

The time is now. Let us not be faint of heart.

China, Russia and South Korea Make Moves Away from Dollar

weak-dollarBRICS (Brazil, Russia, India, China, S. Africa) is the acronym signifying the next generation of economic power houses. Increasingly, these, and nations like them are working to diminish the U.S. Dollar as the World’s reserve currency. This week, China and Russia took more steps towards that goal.

China’s central bank has authorised the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.

That action clears the way for China and South Korea to trade in Yuan (Remnibi) for transactions between their two countries thereby releasing them from use of the U.S. Dollar for international trade.

Russia has been working tirelessly with China and other BRIC nations towards the same goal – freedom from the Dollar and the IMF. As more nations set up clearing houses for other than dollar transactions, the Dollar will become less important in international trade.

China, Japan and Russia have already agreed to similar currency use between them. Chinese currency use for trade in Africa is also rapidly increasing.

Next week, Russian President Vladimir Putin will begin a tour of several Latin American countries, including Brazil.  No doubt, decreasing dollar dependence will be on the agenda.

With more than 60% of the World’s currency reserves being held in U.S. Dollars, this increasing trend will have impacts.

The first, and most obvious impact will be massive inflation – in both the cost of goods and the cost of money. The dollar’s value will decline and make food, clothing, gasoline and just about everything else cost much, much more. Interest rates will skyrocket and make borrowing money just about unaffordable.

A portion of the rest of the world envisions a world without America. Some are making sure it happens.

 

Even Democrats realize Cap and Trade = economic disaster

CA dems re-think cap and tradeFor years, economists have been saying that cap-and-trade would be an economy killer. Now, a group of California Democrats has come to the same conclusion in a letter to the head of California’s air resources board.

The 16 Democrats have requested a delay or change to the rules that would put gasoline under the same cap-and-trade rules as power stations have been suffocating under. The rules are set to take effect in 2015.

In the letter, the group warned that “fuel prices for consumers are going to be driven up once fuel is covered under cap-and-trade at the start of next year, weakening the economy just as California is recovering from the last recession, and hurting the most vulnerable members of our communities who must commute to work and drive long distances for necessary services like medical care.”

Now they suddenly understand that their policies are hurting working people and families?

Everyone remembers Obama’s famous “necessarily skyrocket” remarks. Cap-and-trade is intended to make sure that energy prices do just that. Shortsightedness may be getting the better of the progressive left.

The higher prices are intended to curb demand, but that doesn’t work on a necessity. Families have to attend school meetings, go to work, go get groceries and such. That requires fuel or electricity.

If fuel and energy prices rise, that trip to the grocery store will cost more and leave less for non-essential spending. Whether the fuel price hikes result in bus fare increases, train ticket price increases or a higher price at the pump won’t matter – the trip will now cost more and leave families with less.

It appears that Obama is following Jimmy Carter’s economic plan .. and getting the same results.

Obama Illegally Shutting Down Businesses with Operation Choke Point

1. Obama_Constitution_ObstructionIn a free-market capitalistic system, the economy grows as companies compete freely for consumer dollars by producing superior products and services, adding jobs while their bottom-line grows. In such a system the government plays a role as referee by protecting consumers and ensuring all corporate players compete legally, and fairly. But in a crony-capitalistic system, the government does more than referee — it intervenes, attempting to assure success of some sectors and companies, while thwarting and even penalizing those that are out of favor with the prevailing ideology. Over the past six years our economic system has become increasingly controlled through governmental cronyism, and it just got much worse, and it’s based purely on ideology.

Early last year the Department of Justice (DOJ) initiated a new probe into questionable mercantile ventures facilitated by commercial banks. Initially, “Operation Choke Point” targeted banks that service payday lenders, especially online, and other services that they thought to be dubious. DOJ pressured banks doing business with such firms to “choke” or restrict access of such firms to banking services, even to the point of closing the accounts of such firms.

2. Lose-some-Weight-ALG-600This policy is not traceable to the passage of Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as FinReg. That Act created consumer protection regulations, as well as other measures such as “too big to fail,” which were designed to prevent a collapse of the financial services industry as we saw in 2008. Those regulations are enforced through the Department of the Treasury.

Operation Choke Point, however, is being run through the DOJ as an extension of the president’s Financial Fraud Enforcement Task Force (FFETF). The Task Force was created in November 2009 for the express purpose of holding accountable the individuals and institutions that created the last financial crisis. This task force, headed by the DOJ, includes the FBI, the Securities and Exchange Commission, the Secret Service, the U.S. Postal Inspection Service, Federal Deposit Insurance Corp., and the Consumer Financial Protection Bureau. The evidence for potential abuses is generated by banks through their reporting of Suspicious Activity Reports (SARs), making banking institutions partners with law enforcement agencies in identifying and flagging questionable financial activity.

3. Cartoon-Obama-the-Crook-600_zpsec017335This puts banks in a tenuous position with law-enforcement and government agencies. As the Wall Street Journal reported last month, “Banks, which need a reliable and safe payments network to survive, have always worked with law enforcement to fight fraud and even terrorism in the financial system. Banks provide tips to law enforcement when a customer’s behavior seems fishy, and they assist in investigations when asked. In the past year alone, banks have filed nearly a million suspicious activity reports with regulators, including suspicions of mortgage fraud, identity theft, counterfeit debit and credit cards, tax evasion and wire-transfer fraud.”

Clearly the intent of the FFETF is appropriate, as it relates to curtailing illegal or dubious financial ventures and transactions, and restricting money-laundering schemes. The problem is, it’s now gone much further than the original intent.

4. ObamaCare_Thomas_Jefferson_Tyranny_1-300x300Two weeks ago, the House Oversight and Government Reform Committee reported that, based on internal DOJ documents, the administration is now using Operation Choke Point to target companies and sectors that are completely legal, yet not viewed favorably by the administration. The report stated that the DOJ is using pressure on banks to “shut down” companies that they find “objectionable.” “We have documented that they are going after gun and ammunitions manufacturers, gun sellers and non-deposit lenders. Their own memos show they are well beyond enforcing the law,” said Rep. Blaine Luetkemeyer  (R-MO) after the report was made public.

And it doesn’t end there. The documents released by the House Oversight Committee show that the DOJ has included the entire firearms industry and classified them with other “high risk” targeted businesses. The trade association for firearms and ammunition manufacturers, The National Shooting Sports Foundation, has reported that, “several of its members have had banking relationships wrongfully terminated as a result Operation Choke Point.”

We have yet again an example of the administration utilizing the tools of governance to discriminate against activities and companies that are legal, that they don’t approve of. As previously documented, the administration has abused their power with the IRS, DOJ, Environmental Protection Agency, the Labor Department, FBI, ATF, and OSHA. The administration has abused the power of government, based on ideology, to harass, intimidate, and put out of business, companies led by conservative contributors, and conservative non-profit organizations.

5. obama-tyranny-irsThis is the type of political corruption we would expect from a banana republic, or a despotic Middle-Eastern regime, certainly not the United States of America. Columnist Charles Krauthammer believes we’ll be dealing for years with the “toxic residue of this outbreak of authoritative lawlessness.” This is no longer simply a partisan issue of concern. This goes right to the heart of what defines our constitutional system of government, for we have, until now, been a country governed by law, not presidential whims based on ideology.

Associated Press award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration. He can be reached at [email protected].

Q1 GDP Down 2.9%: Admin says – meh

Today we learned that the Gross Domestic Product of the United States decreased by 2.9% in the first three months of 2014 – a number greatly different than dismal .1% increase the administration reported initially.

How could this be? According to the Huffington Post Obamacare had just saved the economy from contraction.. or something.

As the U.S. economy teetered on the brink of contraction in the first quarter, one thing stood out. Healthcare spending increased at its fastest pace in more than three decades.

That surge is attributed to the implementation of President Barack Obama’s signature healthcare law, the Affordable Care Act, also known as Obamacare. Because of Obamacare, the nation narrowly avoided its first decline in output in three years.

After the report showing that things were not so rosy, the excuses came fast and furious – no pun intended – from the White House, liberal news and even some economists. The weather was the cause.

Unfortunately for the apologists, most economist believe that the weather only affected the economy to the tune of about 1% of GDP – so where did the rest go?

According to the Wall Street Journal, some, but not all, appears to come from healthcare spending:

Spending on health-care services declined at a 1.4% annualized pace in the first quarter, compared to an earlier estimate of a 9.1% increase. That revision contributed to a revision of gross domestic product to a 2.9% annualized decline from an earlier estimate of a 1% decline.

The WSJ report tells us that even more pain is yet to come thanks to Obama’s attack on one of the largest parts of the American economy:

Michael Feroli, a J.P. Morgan Chase economist, said spending increases related to the new health-care law that didn’t show up in the first quarter “may ramp up more gradually throughout the year.”

For the second quarter, housing starts are down, inventories are down… heck, everything is down. Even the Federal Reserve isn’t acting like Americans are experiencing a recovery (as if they don’t know it.)

The real test will be the second quarter numbers. If we get two quarters of negative growth, Obama will have a recession he’ll get to call his own. Then again, we know he’ll never take the blame so we’ll quietly await Obama’s version of the “Malaise” speech while we all sit back and “eat cake” as instructed by our great leader.

The Economy: National Review and de Rugy promote suicidal “free trade” policies, attack Ex-Im

Last month, the National Review’s pseudoconservative editors (who, BTW, supported John McCain for reelection in 2010) and NRO blogger Veronique de Rugy (a scholar at the GMU’s Mercatus Center) launched another idiotic, ignorant attack on the Export-Import Bank and on the Boeing company (one of the Bank’s beneficiaries).

Why the Ex-Im Bank is needed, and why “free trade” policies like those de Rugy and the NRO advocate are suicidal, is something I’ve written about several times, most recently here, demonstrating how Britain lost her economic preeminence by embracing these “free trade” policies.

In short, the Ex-Im Bank is needed to level the playing field by loaning money to the buyers of American exports. This is because foreign countries heavily subsidize (not merely credit, but subsidize) their own exporters, thus undercutting the prices of their exports and rigging the playing field. At the same time, they impose steep tariffs and VAT taxes on all American products entering their markets.

The Ex-Im Bank is one of the crucial, absolutely needed tools to level the playing field.

But the free traders at the NRO, including its editors and Veronique de Rugy, don’t give up in their idiotic attacks on the Bank. In doing so, they’ve made some of the most idiotic, nonsensical claims I have ever heard on any issue, not just trade.

They falsely claim that the Ex-Im Bank hands out “subsidies”, which is patently false.

Subsidies are free handouts that don’t have to be paid back (and never are).

The Ex-Im Bank, OTOH, awards LOANS, which are quite different thing: they have to be paid back with interest. And in the Ex-Im Bank’s case, they always are. Last year, taxpayers made a profit of one billion dollars on that interest.

De Rugy also protests that Boeing is the largest beneficiary of Ex-Im Bank loans.

But Boeing does not receive a dime from Ex-Im. It is Boeing aircraft buyers that receive Ex-Im Bank loans.

Speaking of Boeing, it is America’s last surviving airliner aircraft maker. It is now locked in a life-and-death survival battle against the European aircraft maker Airbus, heavily subsidized by the governments of European countries, including Veronique de Rugy’s homeland, France (which begs the question: is de Rugy just plain stupid, or is she consciously advocating for a policy that would help Airbus kill Boeing?).

De Rugy asks why Boeing needs Ex-Im loans and whether it can’t simply make good aircraft that customers would want to buy.

But Boeing DOES make excellent aircraft, including the B737, the most popular medium-range jetliner in the world, and the B777, the longest-ranged plane in the world.

But making excellent products is not enough; they have to be cheap enough for customers to buy. And while Boeing receives NO subsidies from the US government whatsoever, its European rival Airbus is LAVISHLY subsidized by European governments, thus reducing Airbus aircraft prices and unfairly undercutting Boeing.

The WTO has found that EVERY SINGLE AIRCRAFT Airbus produces is illegally subsidized and has consequently found the European Union in violation of its obligation to stop such subsidies. Yet, neither the EU nor Airbus have complied or ever will.

The result: Airbus is currently winning over Boeing in the global arena, thanks to the lavish subsidies Airbus receives. In the 10 years from 2004 to 2013, Airbus has received 8,933 orders while delivering 4,824 aircraft, and Boeing has received 8,428 orders while delivering 4,458 planes.

Last year alone, Airbus received 1,503 orders while Boeing only received 1,355. From 2008 to 2013, Airbus has had a lead in orders in EVERY year except 2012.

Looking further back in time, since 2001 Airbus has had a lead (usually a large one) in orders in EVERY year except 2006, 2007, and 2012.

Recall what happened to the US civilian shipbuilding industry when Congress cut off aid to it: it collapsed, being killed by unfairly subsidized foreign competitors.

But according to de Rugy, the NRO’s editors, and idiot politicians like Sen. Mike Lee, America’s last surviving jetliner maker does not deserve support from the US government, even though Airbus is lavishly subsidized by European governments, and despite the fact that EVERY other major trading power in the world has an export-crediting agency like Ex-Im.

Which leads me to the final, and most ludicrous, claim de Rugy has made (on April 17th). It’s a statement that perfectly and completely reveals de Rugy’s and other free traders’ mindset.

De Rugy has stated that even though other countries credit and subsidize their industries and exporters, the US should not “pursue these self-destructive policies.” She asks:

“Does it make sense to pursue these self-destructive policies just because Germany, South Korea, Japan, and China do so?”

Self-destructive?

So according to de Rugy (and other free traders), supporting your own industrial base and exporters is “self-destructive”! ROTFL, you couldn’t make it up! :)

This statement perfectly reveals de Rugy’s and other free traders’ mindset and delusions.

In their warped world, supporting your own industry and your own exporters is “self-destructive” and suicidal; it’s far better to let them die, be killed by foreign competitors, and become dependent on other countries for the products you need. In the fantasy world of de Rugy and other free traders, imports are preferrable to exports and trade deficits are preferrable to trade surpluses.

In their fantasy world, it’s better to let your industrial base and your own exporters be killed by foreign competitors; you don’t need to make any things yourself, it’s better to import them (on borrowed money).

Of course, anyone with half a brain knows that what de Rugy is saying is utter nonsense.

EVERY country that ever became an economic powerhouse – including Germany, Japan, and China – did so by protecting and supporting its industry and exporters; by preferring trade surpluses over deficits, preferring exports over imports, and putting tomorrow before today.

The US was doing the same thing for all of its history until the 1960s – when the free traders took over.

Since then, 6 million good manufacturing jobs and over 55,000 factories have been lost, replaced by nothing. Real wages have not risen since the 1970s. Entire industries have died, and entire regions of many states have seen a crippling deindustrialization and permanently high unemployment.

NO country has risen to economic preeminence by indulging in free trade fantasies – and America won’t be the first.

But according to de Rugy, Germany, South Korea, Japan, and China are pursuing “self-destructive” policies by protecting and actively supporting their industry! LOL!

This would be strange news to these nations. Last time I checked, all of them had sizable annual trade surpluses with the US: Germany, to the tune of $60 bn a year; South Korea, $16.6 bn; Japan, $88 bn; China, $315 bn.

Also, their industries are thriving, while America is exporting its own industry and jobs overseas, mostly to China. Just who is pursuing “self-destructive” policies here?

And just who the hell is Veronique de Rugy to lecture the Germans, the South Koreans, the Japanese, and the Chinese? She’s just another ivory tower academic “economist” who has never worked a day in a real job, has never spent one day outside the purely theoretical academic world, and has never led anything, let alone built a great nation. Neither has any of her fellow academic economists.

These people have never accomplished anything, let alone built or led a great nation.

According to de Rugy, Germany (along with the other countries she’s targeted – SK, Japan, and China) is pursuing a “self-destructive policy.” Let’s see how it has worked out for Germany:

  • It has the world’s fourth largest, and Europe’s largest, economy.
  • Its industry is thriving and makes some of the finest goods in the world.
  • It has an annual trade surplus of $260 bn, meaning it exports $260 bn more than it imports annually.
  • It exports one-third of all it produces and is the world’s third-largest exporter.
  • It is the world’s third-largest car manufacturer after China and Japan.
  • It has an unemployment rate of only 5.3%, lower than even the official (i.e. fake) US unemployment rate of 6.3%.
  • It has a balanced budget and is a country to whom other European nations turn for loans and aid.
  • Its government is one of the leading stakeholders in Airbus, the largest planemaker in the world.

All of this achieved by a country the size of Montana, with only 80 mn people, one quarter of America’s population.

If this is a “self-destructive policy”, bring it on!

And SK, Japan, and China – the other nations targeted by de Rugy for her diatribe?

South Korea, with a population barely around 30 mn, is now among the 20 wealthiest countries in the world by overall GDP and has a healthy trade surplus with the US. Since the ratification of the Korea-US Free Trade Agreement, Seoul’s trade surplus with Washington has TRIPLED.

Japan’s trade surplus with the US last year, at $88 bn, was the largest trade imbalance ever seen between Japan and the US.

America’s trade deficit with China last year, at $315 bn, was the largest trade deficit EVER recorded in ALL HUMAN HISTORY between any two countries.

Such are the results of the “free trade” policies that de Rugy and other free traders advocate.

De Rugy, as usual, is blowing smoke out of her posterior and blathering nonsense about issues she knows absolutely nothing about. Shame on her, and shame on the NRO for giving her a forum to publish her garbage.

 

Federal Debt and A Bad Law (FATCA) May Collapse the Dollar

All of us have experienced the merciless effects of the “law of unintended consequences” at one time or another. We do something that we think is good or proactive, only to discover that there are negative effects produced as byproducts of our good intent. The creation of an unanticipated pejorative result from purposeful action is classified as an unintended consequence, and the government is masterful at it. Perhaps the granddaddy of them all is about to be enacted on July 1, 2014.

Growth-Of-United-States-Government-DebtIn March of 2010 the HIRE Act (Hiring Incentives to Restore Employment Act) was signed into law by the president, having been passed by the House under Speaker Pelosi, and the Senate under Harry Reid. It was designed as a bill that would provide incentives for employers to start creating jobs again. The bill’s efficacy could be debated, but one component of the law could prove debilitating to the dollar as the global reserve currency and the nation’s ability to finance our debt and deficit.

Embedded in that piece of legislation under Title V is the Foreign Account Tax Compliance Act (FATCA), which was designed to target American taxpayers with assets in foreign banks. It had nothing to do with the intent of the HIRE Act, but that seems to be the modus operandi of the federal government, to hide things in plain sight so as to not arouse suspicion. Forbes calls FATCA “the worst law Americans have never heard about.”

national-debt-per-capitaFATCA is creating a data retrieval system that some have compared with the NSA’s (National Security Administration) meta-data information dragnet. It requires all non-U.S. based financial institutions, including banks, credit unions, insurance companies, investment and pension funds, to provide data on all specified U.S. accounts to the IRS (Internal Revenue Service). From that data, the IRS will attempt to collect taxes on revenue from overseas-based accounts of U.S. citizens.

There could be as much as about $800 million a year that could be collected by the IRS from implementation of FATCA, according to the Joint Committee on Taxation. Based on the nation’s current spending level, that’s enough to run the government for about two hours.

FATCA-IRS-bullyWhile $800 million is still a large sum, IRS Commissioner John Koskinen recently informed Congress that the cost of implementation will zero out any anticipated gain to the treasury. And the IRS’s internal Taxpayer Advocate Service issued a report that came to the same conclusion, indicating, “FATCA-related costs will equal or exceed projected FATCA revenue.”

The questionable enforcement measures implemented in the Act are what could portend ominous consequences for all of us. Beginning July 1, 2014, any foreign institution, including foreign government, failing to fully cooperate in providing the requested information to the IRS, can be classified by Treasury as “recalcitrant.” Such institutions will not be paid the full interest they are due on the U.S. bonds, notes, and bills that they own. The Department of the Treasury will consequently withhold as much as 30% of interest payments to them as an “economic sanction.”

In other words, we will not pay, as we have “guaranteed” in the past, full payment of interest on our debt, at least to those classified as “recalcitrant.” Such a partial payment is classified as a “default.” In this case, it’s a willful default, since the full interest payment will be withheld in favor of a reduced payment.

swiss-fatcaEven the possibility of the U.S. intentionally defaulting on some of its debt interest payments is creating some uncertainly in foreign markets. This is alarming since according to Treasury, over $5.8 trillion of our debt is held abroad. So far only about two dozen countries have signed FATCA agreements, indicating a willingness to cooperate with the IRS. And China, the largest foreign holder of our debt, is not among them.

James George Jatras, a former U.S. diplomat and U.S. Senate staffer, said recently regarding FATCA, “In the end, no one really knows how this will work, which is part of the problem. Foreign purchases of U.S. Treasury securities and the reliability of interest payments are essential to America’s financial stability. Even a slight market change in U.S. borrowing costs could have a disastrous impact on the deficit and our economy. Why play Russian roulette with the U.S. debt absent a big, identifiable, countervailing benefit?”

The likelihood is that foreign institutions and countries will be less inclined to purchase U.S. debt if they may be denied up to 30% of the interest due them. With our massive debt of nearly $18 trillion, we have bonds and notes maturing every month. What happens if previous buyers of our debt quit buying? For one thing, the cost of interest servicing that debt will rise, and it could be significant.

weak-dollarTwo years ago, Erskine Bowles, co-chairman of the president’s bipartisan deficit-reduction commission known as “Simpson-Bowles,” called the nation’s compound interest burden “one of the biggest long-term challenges facing the United States.” He said, “We’ll be spending over $1 trillion a year on interest by 2020. That’s $1 trillion we can’t spend to educate our kids or to replace our badly worn-out infrastructure.” And that was even without factoring in a significant increase in interest rates because of a diminished appetite for U.S. debt due to FATCA.

Our economic stability, and the strength of the dollar as the global reserve currency, is directly dependent on a stable bond market for our debt instruments. With the possibility of pending diminution of appetite for that debt, our economic stability as a country is at risk. Clearly, our massive debt and this poorly conceived and implemented legislation, are posing a national security risk that could potentially affect all of us.

Associated Press award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration.  He can be reached at [email protected].

 

Conservatism Contrasted with Obama’s Policy Failures

Conservatives have, from the beginning of his candidacy for the presidency seven years ago, been critical of our sitting president. It has nothing to do, contrary to some sophist’s convictions, with the color of his skin. And our criticisms are not ad hominem for they aren’t against him personally, but against his policies and what he’s doing to “fundamentally transform America.” So for political clarity, lets enumerate a few areas where conservative political policies would make such a difference to the country.

Federal Non-Defense Spending as % of GDP

Federal Non-Defense Spending as % of GDP

First, we would not have more than doubled the national debt from $7.6 trillion, when Nancy Pelosi and Harry Reid took over, to over $18 trillion now. As Hillary Clinton said a couple years ago, that’s a national security issue, since it places our entire nation at risk, economically, fiscally, monetarily, and even in terms of our national security. The deficit would not have quintupled from $263 billion when Pelosi/Reid took over, to $1.6 trillion during Obama’s first year, and remained at $1.3 trillion for the past two years. In other words, we would not be borrowing $.41 for every $1.00 that we spend! Contrary to what Pelosi did after she became Speaker, and including the first term of the Obama administration, we would have actually had a budget passed by the congress. Until the concurrent resolution was passed just last year, we had not had a budget passed by congress since 2006. They’ve been simply running up the national credit cards at unprecedented levels with absolutely no budgetary restraint.

Federal Deficit Since 2000

Federal Deficit Since 2000

After creating an all star panel to assess the budgetary and fiscal crises exacerbated by unabated spending, the president’s Simpson-Bowles Commission recommendations to put the nation on a sound fiscal footing would not have been ignored, but implemented as judiciously and expeditiously as possible. There is still no sign of leadership in resolving the unfunded liabilities, and exacerbated budgetary problems, of Social Security and Medicare. It’s as if the critical mass of those concerns will not be reached during his term in office, so it doesn’t matter, so all that’s occurred is a perpetual “kicking the can” down the road for some future leader who has some backbone and leadership abilities to address them. A 2,700 page legislative monstrosity that took over 1/5th of the national economy to put government in charge of health care would never have occurred. And we certainly wouldn’t have stolen $716 billion (now $741 billion according to the CBO) from Medicare to pay for it. Instead of piling on requirements for “qualified” health insurance policies, the over 2,200 covered requirements would have been removed so people could buy exactly the coverage they want, rather than what the government compels them to buy. And policies could be bought across state lines for increased price competition. Realizing that one of the greatest deterrents to small businesses creating new jobs is the high cost of regulation, the current $11,500 regulatory cost to small businesses per employee (per the SBA) should be reduced by getting government out of the business of micromanaging every aspect of the business environment. And certainly the regulatory burden of small business would not be exacerbated by another 30% with the additional regulatory expenses of Obamacare, FinReg, and expanded EPA regulations. Realizing that our economic model is so severely tainted by crony capitalism, the unhealthy marriage between business and government regulation and policy, it’s time to start unwinding that interconnectedness. The federal tax code for corporations needs to be rewritten, by excluding all loopholes that are favorable to select companies and industries, and create instead a fair flat tax for corporations.

Failure of Quantitative Easing

Failure of Quantitative Easing

Over the past six years, the Federal Reserve, in the name of “economic stimulus,” has taken over $4 trillion out of banks hands to purchase debt instruments, through the three iterations of Quantitative Easing. There has been negligible benefit other than giving the stock market an artificial high. It’s time to rein in the Federal Reserve, get the FOMC out of the “stimulus” business, and return them to their primary functions of controlling inflation and maximizing employment. Congress and the American people have a right to demand that the chief executive of the country be held to constitutional and legal restraints of his power. He should not act as if he is above the law by selectively picking and choosing which laws would be enforced, and declare existing laws void because the chief executive disagrees with them. And the use of the Executive Order should be used legally, based in existing federal statute, and not creating new laws and regulations with the stroke of his pen. That’s just a beginning. I could go on and on. Those differences would contribute to a more secure fiscal and economic future for the country; a stronger dollar; greater participation in the job market and lower unemployment; a more robust economy and expanding job market; lower cost health care insurance; less crony-capitalistic corruption from the relationship between government and corporate America; less meddling in the private sector; more individual freedom; and less totalitarianism in the Oval Office. Associated Press award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration.  He can be reached at [email protected].

What today’s economic news tells us about the ‘recovery’

Listening to the President, his administration, some in Congress and several news reports, many would say the economy is recovering slowly but gaining traction. Seeing the economic data released today may reveal a somewhat more real reality.

The unemployment figures released this morning seem promising, but only in a vacuum. Claims dropped 24,000 to a seasonally-adjusted 297,000 for May. What the report doesn’t tell us is why fewer people filed claims. Was it because all of these folks have found gainful employment? Or are fewer people re-entering the labor market after having given up on finding a job some time ago?

Home builders are feeling less confident in a housing recovery. The latest survey of builders dropped to 45 for May and the April number has been adjusted lower.  Anything below 50 is considered “negative sentiment.”

The Philadelphia Federal Reserve Bank’s business activity index dropped from 16.6 in April to 15.4 in May. New orders also saw a decline from  14.8 to 10.5 indicating that the pace of growth is slowing.

If economists’ data isn’t enough, two of the nation’s largest retailers are reporting disappointing earnings.

Wal-Mart reported the smallest sales growth in 5 years today. The report blames the harsh winter for keeping customers out of their stores, but then goes on to forecast a second quarter that will come in below analysts’ expectations.

Kohl’s reported their first quarter results today and missed – on both sales and earnings. The retailer showed a $13 million drop from the same time last year in sales and missed analysts’ expectations by $15 million.

How Britain Achieved – And Lost – Economic Preeminence – And Lessons For The US

In the mid-19th century, and in the first few decades afterwards, Britain was an unmatched military, economic, colonial, and thus geopolitical colossus, by far the most powerful country in the world. There was no country that was even close to matching the military or economic power of Britain, which had the largest empire in the world, spanning all continents.

So vast was the empire that it was one on which the sun never set – because no matter where the sun was shining at that moment, it was shining on British colonies, dominions, and possessions. So powerful was Britain that she was able to exert influence all around the world and act as the arbiter of world affairs. Thus, the world experienced an era of Pax Britannica.

Why? Because Britain was by far the world’s most powerful country, both economically and militarily.

In the middle of the 19th century, around 1850, Britain was by far the world’s largest producer of coal, pig iron, steel, and warships, consumed the most cotton and coal, and her industrial machines were the most modern and most powerful in the world. This enabled Britain to have a Navy that was far larger than the combined navies of the US, France, Japan, and Russia. Whether the measure was total fleet tonnage or the number of any class of warships, the UK Royal Navy had far more of them than any other Navy in the world.

Britain Loses Her Economic, Military, and Geopolitical Preeminence

Fast forward half a century to 1900, and then to 1913, the eve of World War I, and we see a completely different picture. Britain had, by then, lost its first place in the world, both economically and militarily. The US, Japan, and Germany began building navies rivalling the Royal Navy. The US and Germany also overtook Britain economically by all key metrics. As a result, Britain had to assemble a coalition of countries, the Entente, and enlist the US as an Associated Power to win World War 1 – and contracted a huge debt to win that war, because Germany proved to be a very tough enemy to beat.

Even before then, before WW1, Britain had lost its economic preeminence. Consider:

  • In terms of coal production, Britain dominated the pack in 1870, producing 125 mn tons of coal vs 41 for the US and 42 for the German states (mostly Prussia). By 1900, it was producing 185 mn tons, but the US wasn’t far behind at 143 tons and Germany was at 89 tons. By 1913, the UK was producing only 292 tons, while America’s annual coal output was 517 tons and Germany’s was 277.
  • The UK producted 6.7 mn tons of pig iron in 1870, while the US produced only 1.9 mn tons. But in 1900, the US produced 9.4 tons vs 8.0 mn for Britain. In 1913, the US produced 31.5 mn tons, and Germany 19.3 mn tons, versus only 10.4 mn tons for Britain.
  • The US overtook Britain in terms of steel production even earlier, in 1886, and Germany did so in 1893.
  • In 1871, the efficiency and output of British steel mills was two times that of US steel mills, but by 1891 it was only 50% of America’s steel output.
  • In 1890, the power of steam machines in the US industry was 45% higher than those in the British industry.
  • In 1870, Britain’s share of the global industrial production was 32%; by 1913, it was only 14%. America’s share during the same timeframe rose from 23% to 35.8%, and Germany also overtook Britain, from 13.2% in 1870 to 15.7% in 1913. The US and Germany were simply producing – and earning – more. Period.

Thus, the country that was essentially the world’s biggest coal mine, steel mill, and factory in 1850 was, by 1913, only in third place – not even in the second place – by the key economic metrics of the time! In terms of industrial production, it was lagging behind Germany and far behind the US.

The military consequences of Britain’s economic decline followed, though not immediately or quickly. But inevitably, eventually, they did follow – and they weren’t pretty.

In 1883, Britain had 38 pre-dreadnought battleships, while the US and Japan had zero, Russia had but three, Italy had only 7, Germany 11, and France 19. This means Britain had more battleships – the key weapons of the day – than the next three countries combined!

In 1897, the gap was narrower, though Britain still led the pack: it had 62 battleships in service or construction, but France had 36, Russia had 18, Germany had 12, Italy also 12, the US had 11, and Japan had seven. The next three countries (France, Russia, and Germany or Italy) had more of these warships than the UK.

Matters grew even worse for Britain when she launched HMS Dreadnought, the most powerful battleship in the world at the time, in 1905. The British thought these warships would guarantee them naval supremacy. But they were wrong. Just three years later, the Germans had only three dreadnoughts fewer (9) than the British (12). And other nations were building such warships as well.

Moreover, at Tsushima in 1905, the Japanese Navy showed that a heavily outnumbered fleet can still trash a larger one. Despite being outnumbered two-to-one and not having any significant mineral resources, the Japanese still trounced the Russians in what was one of the biggest military victories in human history, a naval version of the Battle of the Cannae. The Japanese barely lost 3 torpedo boats and 117 men, while the Russians lost their ENTIRE fleet in the Far East – 21 warships – and over 5,100 KIA.

This showed that a smaller, heavily outnumbered fleet, could, in an individual battle, beat a twice larger navy if better led, manned, and equipped.

So Britain’s unquestionable naval supremacy was a thing of the past – ESPECIALLY since the Germans had only slightly fewer dreadnoughts than the British.

As a result, Britain needed to appease the US in the Western Hemisphere, court Japan to make it Britain’s ally in the Far East, and enlist former rivals France and Russia – with whom the UK nearly went to war just years before – as allies to counter growing German power.

By 1914, one hundred years ago, the three countries went to war together – and still couldn’t beat Germany, by now Europe’s preeminent economic and military power. Russia was driven out of the war, and the US had to be enlisted to help win the war. Britain itself was too weak to defeat Germany, even in an alliance with France and (until 1917) Russia.

In the course of World War I, Britain contracted such a huge war debt that it had difficulties paying it down later, and from the world’s banker became America’s debtor.

How Did It Come To Pass?

How did it happen? How did Britain lose its economic and military preeminence?

To some degree, this was because of the obsolete structure, growing technological obsolence, and the conservative mindsets of the leaders of, British industry. And partly it was due to the reunification of Germany, which produced a formidable rival for Britain.

But these obstacles could have easily been overcome. None of these were fatal illnesses.

The REAL cause of Britain’s economic and military decline was its embrace of the poisonous, suicidal, pernicious ideology of “free trade” and the consequent policies.

Until the mid-19th century, Britain – like every country that ever rose to economic preeminence – protected and nurtured its industry with protectionist laws and customs duties.

But beginning in the 1840s, the Parliament began repealing them. In 1846, it repealed tariffs on imported grain (the Corn Laws); in 1850, it got rid of the Navigation Act; and in 1860, it scrapped protective tariffs completely. That’s it – there were no more customs or tariffs on imports to Britain. Anyone was free to export to Britain free of any tariffs.

British industry was thus left without ANY protection against foreign competitors – because no other country had done such a thing. All other countries continued, to various degrees, to protect and nurture their own industry with tariffs as well as non-tariff barriers.

This was especially true of… the US and Germany, the two countries that overtook Britain and took away her crown. The US had high protective tariffs since the 1860s, and Germany since the times of the Customs Union, established in 1834.

Thus, Britain effectively committed unilateral disarmament in the trade arena, which is just as suicidal as disarmament in the military arena.

The problem was simple: US and German companies were protected by these countries’ tariffs and non-tariff barriers to imports, while British companies were left without ANY protection against foreign competitors.

Thus, the US and Germany began flooding the world – including Britain herself – with their products – and achieved greater shares of the world’s industrial production and trade than Britain.

This is not surprising to anyone knowledgeable about economics. For protectionism is the policy of RISING economic powers, while free trade is the policy of DECLINING ones.

Protectionism is the road to wealth, prosperity, and national power, while free trade is the road to deindustrialization, unemployment, and economic stagnation.

Contrary to what free trade ideologues may tell you, NO nation in history has ever risen to economic preeminence by indulging in free trade.

EVERY country that ever became an economic powerhouse did so by protecting, nurturing, and supporting its industry against foreign competition – England under the Acts of Navigation, Britain until 1860, France under Colbert and Napoleon, Germany under the Customs Union and Bismarck, the US from the 1860s to 1960s, postwar Japan, China today .

America Is Losing Her Preeminence – And Fast

In today’s world, America is losing her economic and military preeminence even faster than Britain did in the late 19th century – and America’s edge over the world was never as great as Britain, except the late 1940s and early 1950s.

Just recently, the World Bank predicted that China would overtake the US in GDP by the end of this year. In 2012, the IMF predicted China would leapfrog the US by 2016. The Economist predicts it will happen by 2019.

China is already the world’s top exporter, having surpassed Germany a few years ago, which itself surpassed the US in the early 2000s. China is also the world’s top maker of many goods of all sorts, and also has trade surpluses with many other countries in the world. For example, its trade surplus with France runs at over 30 bn euros per year!

In 2013, the US trade deficit with China – thanks to free traders’ suicidal policies – was the largest annual trade deficit EVER recorded between any two nations, at $315 bn.

The US is also running trade deficits with almost every other country in the world: with crisis-stricken Italy, at $20 bn per year; with Ireland, at $25 bn per year; with Germany, $60 bn per year; with Canada, $32 bn per annum; with Mexico, $61 bn; with Japan, $88 bn per year; with South Korea, $16.6 bn per year.

This is because the US has almost completely disarmed itself unilaterally in terms of trade. Foreign countries exporting goods to the US pay little in the way of tariffs, while US companies trying to export to foreign countries face steep tariffs – and heavily-subsidized competitors – abroad.

Also, many foreign countries, including China and Japan, manipulate their currencies by devaluing them, thus making their exports cheaper abroad (e.g. in the US). Yet, Japan plans to devalue its currency still further, making its exports still cheaper.

Yet, American free trade ideologues oppose taking ANY action against such blatant cheating and such uneven playing field, and demand that the last vestiges of protection for the US industry be scrapped: Buy American Laws, the Export-Import Bank, and the few tariffs that remain.

When, in 2012, GOP presidential candidate Mitt Romney pledged to designate China as a currency manipulator, free trade ideologues from the left and the right accused him of wanting to start a trade war… not realizing China has ALREADY been waging a trade war on the US for decades.

The Military Consequences

And just like Britain’s loss of economic preeminence was followed by her loss of military superiority, so is the US losing its last vestiges of military superiority over China (and Russia) as a consequence of committing economic suicide.

The US no longer has a monopoly on any military technology. Its military has always been smaller than China’s – the latter is the world’s most populous country after all – but China’s military is now also much more modern than a decade or two ago.

The PLAN, the Chinese Navy, is already larger than the USN and has more submarines. Their surface combatants are as good as American ones, and their diesel-electric submarines are far quieter than anything the USN has. Their anti-ship missiles are much faster and longer-ranged than America’s sole anti-ship missile, the Harpoon. China also has 100,000 naval mines, against which the USN is nearly helpless as it has only 13 minesweepers – none of them in the regular Navy.

The PLA Air Force has hundreds of modern Generation 4+ fighters, including Flankers and J-10s, plus 389 old but highly agile and fast J-7 fighters. And what does the USAF have? 180 top-notch Raptors and around 300 F-15C/Ds, I’ll give you that much; but its F-16s would not stand a chance against Chinese fighters other than the old J-7. And the F-35, the most expensive, heaviest, and most sluggish “fighter” in the world, will be such a heavy pig it will be inferior to EVERY fighter on the planet.

The PLAAF is now developing TWO stealthy fighters – the J-20 and the J-31 – which, when inducted into service, will make every other fighter in the world, except the F-22 and the Russian PAKFA, obsolete, useless, impotent, and irrelevant.

The PLA’s Second Artillery Corps now has 66-75 ICBMs capable of reaching the US, plus 140 medium- and over 1,600 short-range ballistic missiles and hundreds of ground-launched cruise missiles – weapons which the US does not have and is prohibited from developing.

PLA_ballistic_missiles_range-590x362

The PLA also has a lopsided edge over the US in cyber and space warfare. Its hackers routinely penetrate US government networks with impunity, and it has an arsenal of anti-satellite weapons capable of shooting down all US satellites anytime.

Similarly, China’s anti-ship missiles are so fast, so long-ranged, so numerous, and so cheap that China could easily saturate USN warships with them – and USN defenses are incapable of intercepting supersonic, sea-skimming cruise missiles.

China also has many, many more nuclear weapons than the US DOD and American arms control afficionados are prepared to acknowledge: at least 1,600 (according to Russian General Viktor Yesin), and up to 3,000 (according to Dr Philip Karber, the top nuclear strategist in the Reagan Administration).

And, of course, China’s military has not been infected with political correctness and the open celebration of homosexuality and feminism – unlike the US military.

Let’s face the facts: America’s economic and military dominance is already largely a thing of the past. The US retains an advantage only in a few categories and on a few metrics – and China is now working hard on closing those few gaps as well.

China is now doing to the US what the US itself and Germany did to Britain in the late 19th and early 20th century: overtaking it economically and militarily.

The difference is that, unlike Britain, the US has no friendly power to whom hand over the torch.

So either the US will break free of its “free trade”, “noninterventionism”, “let’s mind our own business”, and “let’s cut the military” fantasies, or it will completely lose its preeminent status to China, with all the consequences stemming from that.

Whose party platform is it?

Today is May 1st, also called the “International Workers’ Day”, a communist feast par excellence, celebrated by communists and socialists, indeed by Leftists of all stripes, around the world. So I would like to ask you, Dear Readers, if you can recognize which socialist party had the following platform? Whose party platform is it? (No looking it up in Google!)

We demand that the state be charged first with providing the opportunity for a livelihood and way of life for the citizens. (…)

All citizens must have equal rights and obligations.

The first obligation of every citizen must be to work both spiritually and physically. The activity of individuals is not to counteract the interests of the universality, but must have its result within the framework of the whole for the benefit of all.

In consideration of the monstrous sacrifice in property and blood that each war demands of the people, personal enrichment through a war must be designated as a crime against the people. Therefore we demand the total confiscation of all war profits.

We demand the nationalisation of all (previous) associated industries.

We demand a division of profits of all heavy industries.

We demand an expansion on a large scale of old age welfare.

We demand a land reform suitable to our needs, provision of a law for the free expropriation of land for the purposes of public utility, abolition of taxes on landand prevention of all speculation in land.

We demand struggle without consideration against those whose activity is injurious to the general interest. (…)

The state is to be responsible for a fundamental reconstruction of our whole national education program (…)The State is to care for the elevating national health by protecting the mother and child, by outlawing child-labor, by the encouragement of physical fitness, by means of the legal establishment of a gymnastic and sport obligation, by the utmost support of all organizations concerned with the physical instruction of the young.”

Don’t recognize whose platform is it?

The Communist Party of the Soviet Union? Of China? Of Italy? Of the USA? The French Communist Party? The French Socialist Party? The UK Labour Party? The Argentine Justicialist Party?

Nope, nope, and nope. This is the platform of the National Socialist German Workers’ Party (NSDAP), AKA the German Nazi Party, planks no. 7, 9, 10, 11, 12, 13, 14, 15, 17, 18, 20, and 21.

You see, despite all the attempts by the global Left to tar the Right with responsibility for and ideological kinship with the Nazis, for all their attempts to stick the Nazi tag to the Right, for all their false claims that the Nazis were “far-right”, the Nazi Party was thoroughly LEFTIST through and through.

Nazism is a mere shorthand for “national socialism”, and that brand of socialism, while being nationalistic, was still SOCIALIST and thoroughly leftist. The Nazis advocated, and implemented, nationalisation, land reform, outlawing child labor, and the division of corporate profits.

Not only that, but their leader, Adolf Hitler, publicly said that he and other Nazis were SOCIALISTS:

“We are socialists, we are enemies of today’s capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are determined to destroy this system under all conditions”

– Adolf Hitler, Hitler’s speech on May 1, 1927. Cited in: Toland, John (1992). Adolf Hitler. Anchor Books. pp. 224–225. ISBN 0385037244.

No matter how hard leftists around the world deny it, national socialism was a thoroughly LEFTIST ideology, and the Nazis were their ideological, national socialist cousins. The only difference between them and communists is that communists are “international socialists.”

Stop Maligning the Export-Import Bank. America Needs It.

Recently, pseudoconservative Sen. Mike Lee (R-UT) and a few of his Congressional chums, along with the neoconservative Heritage Foundation, have resumed their utterly misguided and dishonest propaganda campaign against the Export-Import Bank, maligning it with a litany of lies. Furthermore, because the Bank’s 2-year operating authorization is set to expire soon, Lee and his fellow pseudoconservative Congressional pals seek to kill the Bank, as does the Heritage Foundation and its lobbying outfit, Heritage Action.

They falsely claim that the Bank hands money out to “politically connected” businesses, skews free markets, and exposes taxpayers to unnecessary loan risk. They falsely claim that over 80% of its loans go to huge corporations like Boeing and General Electric. They malign the Bank as a “crony capitalist” agency.

All of their claims are utterly false, however. In this article, I will correct the record.

The Facts About The Export-Import Bank

Here are THE FACTS about the Export-Import Bank:

  • It does NOT receive any funding from the taxpayers and does not cost them a single cent. In fact, thanks to its interest rates, it returns a profit to taxpayers every year – to the tune of $1 bn last year.
  • It does NOT provide any subsidies to anyone. It only provides LOANS to businesses – which have to be (and are always) fully paid back with interest.
  • Over 90% of its loans are provided to SMALL BUSINESSES, NOT big companies like Boeing and GE.
  • It is NOT a crony capitalist agency, because crony capitalism is the act of providing handouts to those individuals or businesses who are politically connected or sympathetic to a sitting government. The Ex-Im bank provides loans without regard to businesses’ and their owners’ political sympathies or contributions.
  • It is absolutely necessary to help American companies level the playing field on the global market, which is heavily skewed towards foreign competitors who are lavishly subsidized (not merely provided with loans, but outright subsidized) by their national governments. Foreign countries always have (and will, for the foreseeable future) lavishly support their manufacturers, especially in key industry sectors. The only choice for the US is to either do the same or stop aiding its exporters and thus lose its industry entirely over time.
  • Big companies, such as Boeing and General Electric, receive only a small portion of the Export-Import Bank’s loans.
  • Ex-Im has NEVER loaned any money to Solyndra, despite Heritage Action’s utterly false claims.

Ignoring these facts, Sen. Mike Lee nonetheless presses for the Export-Import Bank’s deauthorization and has recently declared in the National Review that “whether the Export-Import Bank provides loans to respected, successful companies like Boeing or failed companies like Solyndra is irrelevant.”

Excuse me? Whom it provides loans to is irrelevant?

Are you on drugs, Sen. Lee?

It matters a lot!

Whom the Bank loans money to matters, because it determines whether the loan is likely to be paid back with interest or not. In the last 27 years, it has always been in all cases.

Sen. Lee protests that it’s irrelevant because loaning money to private companies – even to American exporters – supposedly skews the free market and violates conservative principles.

But as I will demonstrate, this is utter gibberish.

Economic Nationalism Leads To Prosperity, Free Trade To Economic Decline

Supporting American exporters – especially with loans rather than subsidies – does NOT skew free markets and is NOT a violation of conservative principles.

Globally, there are NO free markets – the global marketplace is already heavily skewed… in favor of America’s and American companies’ competitors, that is.

Virtually all major traders around the world, except the US, protect their industry with subsidies, loans, protective tariffs, and in many cases (e.g. China), currency manipulation.

China, India, Japan, Russia, Germany, France, Mexico, Canada – all of them, and many other countries around the world, protect, nurture, and generously aid their industries, especially exporting companies.

The US and the UK are the only major traders in the world who don’t do so and instead indulge in “free trade” fantasies.

It is therefore no surprise that the US has huge trade deficits with almost every other country around the world: with Italy and Ireland, $20 bn annually each; with Germany, over $30 bn annually; with Mexico, over $60 bn per year; with South Korea, $25 bn per year (it has tripled since the ratification of the KORUS free trade agreement).

America’s trade deficit with Japan is the largest America has ever had with Nippon.

America’s trade deficit with China last year was the largest ever recorded in human history between any two countries, at over $300 bn! Not just the largest between the US and China, but the largest trade deficit ever recorded between any two countries!

Such are the disastrous results of suicidal “free trade” policies that the GOP and the Heritage Foundation have promoted for decades.

These folks, including Sen. Mike Lee, are obviously ignorant of the fact that EVERY country which ever became an economic power did so by protecting and supporting its industrial base, especially exporters: England under the Acts of Navigation, Britain until the mid-19th century, France under Jean-Baptiste Colbert and Napoleon, Prussia under the Customs Union, Germany since the 19th century, Japan since the Meiji era, America from the 1790s to the 1960s, China today.

NO country has ever become an economic power, or generated prosperity, by indulging in free trade fantasies. Free trade is only for dupes and idiots.

America’s own history is instructive here. The US used to be, economically, a totally independent country and THE world’s factory of all sorts of goods. Today, it has been largely deindustrialized and is dependent on China for the necessities of life – thanks to suicidal “free trade” policies.

From the Founding Fathers’ era until the 1960s, the US followed the Founding Fathers’ economic preceipts: Manufacturing, not finance or services, is the nation’s economic muscle. Trade surpluses are preferrable to trade deficits. Exports are preferrable to imports. To protect the economy and Americans’ jobs, the US industrial base must be protected by any means necessary. “Made in the USA” should always be preferred.

It is no coincidence that all four Presidents who made it to Mount Rushmore were protectionists.

“Thank God I’m not a free trader”, President Teddy Roosevelt remarked once.

But starting in the 1960s, America began to unilaterally open up its huge market to foreign companies without obtaining reciprocation from foreign countries.

Thus became the deindustrialization, and the unilateral economic disarmament, of America.

And even though it was a Democratic-controlled Congress who passed, and a Democrat President (JFK) who signed, the Trade Promotion Act, it is Republicans who have led the way in this unilateral economic disarmament.

And, predictably, it has proved just as disastrous for America’s well-being as the Democrats’ campaign to unilaterally disarm America militarily.

Indeed, America now has two pro-unilateral-disarmament parties: the Democratic and Republican Parties.

The Democrats, led by Harry Reid and Edward Markey, want to unilaterally disarm America militarily. Republicans, led by Sen. Mike Lee, want to unilaterally disarm America economically.

America has now fewer than 25% of the nuclear arsenal she had in 1991, at the Cold War’s end, and one of its last protections for the US industry is the Export-Import Bank. If that is terminated, the US industrial base is likely to go the way American civilian shipbuilders went after the Reagan Administration cut off aid to them: out of business.

 

Rand Paul is the one distorting Reagan’s foreign policy

ReaganPeaceQuote

 

Ronald Reagan was such a successful President – especially in the foreign policy realm – that virtually all Republicans today want to project themselves as the next Reagan and claim that their foreign policy is the same as Reagan’s in order to woo national security oriented voters.

One such politician is Sen. Rand Paul (R-KY). Because his principal rival for the 2016 Republican nomination, Sen. Ted Cruz (R-TX), has distinguished himself from Paul by adopting Reagan’s foreign policy principles while exposing Paul as the neo-isolationist that he is, the Kentucky Senator is desperate to defend himself.

Therefore, he has recently launched an attack on unnamed “Republicans” (presumably Cruz) on the Breitbart website, falsely accusing them of “warping” Reagan’s foreign policy.

But in fact, it is Rand Paul, NOT Ted Cruz or other Republicans, who is warping and distorting the Gipper’s foreign policy. Let me demonstrate how.

Rand Advocates Deep Defense Cuts

Rand advocates deep, crippling cuts in America’s defenses, including and beyond sequestration; withdrawing US troops from strategically important bases around the world which are needed for power projection; isolationism masquerading as noninterventionism; and opposes even the most modest sanctions on Iran, claiming they would lead to war (a false claim that the anti-defense Left, including the Ploughshares Fund, also makes). Indeed, Rand has said that “not only should the sequester be maintained”, but that government spending, including defense spending, should be cut even further – as if the sequester’s and pre-sequester Obama defense cuts were not deep enough.

As a reminder, in his first two years, Obama killed over 50 crucial weapon programs, including the F-22 Raptor fighter (the only aircraft capable of defeating the newest Russian and Chinese fighters), the Zumwalt class destroyer, the Kinetic Energy Interceptor, the Multiple Kill Vehicle for kinetic missile defense interceptors, and much more. In 2011, Obama cut another $178 bn from the defense budget under the guise of efficiencies. And in August 2011, Obama demanded and obtained another $1 trillion in defense cuts over the FY2012-FY2012 decade, including a $550 bn sequester that will take defense spending to $493 bn (less than 3% of America’s GDP) next year and keep in there until the mid-2020s!

Yet, Rand Paul thinks these defense cuts are not sufficient and demands even deeper, more crippling, defense cuts. This completely belies his claim that

“I believe, as he did, that our National Defense should be second to none, that defense of the country is the primary Constitutional role of the Federal Government.”

If the cuts required by the sequester (let alone the deeper cuts Rand demands) are implemented, the US military will be gutted. It will be a paper tiger, not a military force “second to none.”

Reagan would NEVER advocate such idiotic policies, and indeed throughout his entire presidency implemented the very OPPOSITE of the policies Rand advocates. OTOH, Ted Cruz – unlike Rand Paul – does support a Reaganite foreign policy: rebuilding America’s defenses, standing up to dictators like Putin where it matters, but avoiding being drawn into irrelevant or murky jihadist viper pits like Syria.

But it gets even worse. In the Breitbart article cited above, Rand not only distorts the Gipper’s foreign policy, he shows he completely doesn’t understand what that policy was and how it worked, and demonstrates – there, as well as in his recent (Feb. 25th) Washington Post op-ed – that he does NOT support a Reaganite “Peace Through Strength” foreign policy.

He claims that:

“Reagan also believed in diplomacy and demonstrated a reasoned approach to our nuclear negotiations with the Soviets. Reagan’s shrewd diplomacy would eventually lessen the nuclear arsenals of both countries.”

Leaving aside the undisputable fact that cutting America’s nuclear deterrent has proven to be a foolish mistake, it was Reagan’s toughness, not diplomacy, that won the Cold War. In fact, it was his toughness that brought the Soviet Union back to the arms reduction barganining table in the first place.

The Soviets returned to the negotiating table because they knew the US could keep up the arms race for long, while their own economy was flagging (and in 1991, it collapsed, as did the USSR itself) and couldn’t really sustain the arms race any longer, especially with the costs of the Afghan war, the Chernobyl disaster, and the late 1980s’ oil glut added. (Reagan convinced Saudi Arabia to dramatically increase its oil output to cut global oil prices and thus undermine Moscow’s oil-dependent economy).

I’ll repeat it again: it was Reagan’s TOUGHNESS, his harsh policies towards the USSR, that brought the Soviets back to the bargaining table and eventually won the Cold War. Not diplomacy, not detente, not nice words, not his friendship with Gorbachev.

Reagan never sheathed the sword – the sword was always hanging over the Soviets’ heads. And that’s PRECISELY why Gorbachev agreed to make concessions.

Rand further claims that:

“Many forget today that Reagan’s decision to meet with Mikhail Gorbachev was harshly criticized by the Republican hawks of his time, some of whom would even call Reagan an appeaser.”

But, as demonstrated above, it was Reagan’s TOUGH POLICIES, not diplomacy or nicety, that brought the Soviets back to the bargaining table. And Gorbachev initially wasn’t in a mood to make concessions. It was not until he understood the US was in a far stronger negotiating position, and when Reagan revealed the documents Col. Ryszard Kuklinski (a Warsaw Pact defector) handed over to the CIA, that Gorbachev began to make concessions.

(At the first Reagan-Gorbachev meeting, in 1985, the Soviet leader was initially as stubborn as his predecessors, not willing to make policy concessions. Then, Reagan’s Defense Secretary, Cap Weinberger, took his ace out of his sleeve: he gave the maps [stolen by Colonel Kuklinski] of secret Soviet bunkers, built for nuclear war, to Reagan, who gave them to Gorbachev, who in turn gave them to Marshal Sergei Akhromeyev, the Soviet Chief of the General Staff, who accompanied Gorby. Akhromeyev was very scared upon seeing the documents, and explained their importance to the civilian Gorbachev. From then on, the Soviets were more willing to make concessions.)

Rand also believes firmly in a soft, appeasement-like policy towards Russia – ignoring the fact that it was such policy that led to the current  Crimean crisis in the first place. He falsely claims in his WaPo op-ed that America’s relationship with Russia should be “respectful” and that:

“There is a time for diplomacy and the strategic use of soft power, such as now with Russia. Diplomacy requires resolve but also thoughtfulness and intelligence.”

No. Diplomacy has had its time – and has dismally failed, as usual. Now is the time for FIRMNESS and MANLINESS. Now is the time to impose the harshest sanctions on Russia that are possible and to dramatically increase oil and gas production in the US (ANWR, NPRA, OCS, shale formations, authorizing the Keystone Pipeline) and to export these fuels to Europe to dramatically reduce its dependence on Russia for hydrocarbons. This would strike Russia where it would really hurt Moscow – and accomplish America’s goals without a single soldier and without firing a shot.

As for a “respectful” relationship with Russia – tell that to Vladimir Putin. Lecture him about “respectful” relationships, Mr Paul, not your fellow Republicans. Putin’s Russia has, in recent years:

  1. Invaded two sovereign countries on false pretexts, and in reality because they started aligning themselves with the West.
  2. Threatened a nuclear attack on the US or its allies at least 15 times.
  3. Repeatedly flown nuclear-armed bombers into US and allied airspace (and even into the airspace of neutral Sweden) on many occassions, even once on July 4th,
  4. Provided diplomatic protection to Iran, North Korea, and Syria, nuclear fuel and reactors to Iran, weapons to Iran and Syria, and sold tons of advanced weapons to China – weapons which will be used to kill American troops.
  5. Murdered journalists and other dissidents (e.g. Anna Politkovskaya, Alexander Litvinenko), and jailed many others, opposing the Putin regime.
  6. Conducted a huge military buildup that continues to this day and is slated to continue for long but which long ago has exceeded Russia’s legitimate defense needs.
  7. Repeatedly violated the INF treaty by testing and deploying missiles banned by the treaty.

And the US is supposed to have a “respectful” relationship with such a hostile regime, Senator Paul? Are you on drugs? Who is your foreign policy advisor, Pat Buchanan?

In short, Rand has shown, once again, that he is NO Reaganite, that he is virtually indistinguishable from his father on policy matters, and that he clearly does not believe in a “peace through strength” policy. Furthermore, he’s distorting the Gipper’s foreign policy record. Conservatives must not allow him to fool them; he would continue and even double on Obama’s failed twin policies of unilateral disarmament and appeasement of America’s adversaries. Just like Obama, Paul advocates appeasement towards the world’s most dangerous regimes, from Russia, to Iran, to Syria. No real conservative would ever vote for him.

The Good and Bad News About The FY2015 Defense Budget

ReaganPeaceQuote

This week, the DOD formally submitted to Congress its proposal of the FY2015 defense budget. The base defense budget would amount to $496 bn, and there would be a roughly $80 bn war supplemental for the final year of the Afghan war, thus bringing the total to around $580 bn, i.e. less than 4% of America’s GDP. In a few years, the war supplementals will be gone, and the base defense budget will shrink further to $493 bn, i.e. below 3% of GDP – the lowest level since before Pearl Harbor.

Already the US spends the smallest amount of money (as a share of its economy) on defense since FY1948, excluding the Clinton years when defense spending plummeted to 3.0% of GDP. Barack Obama’s budget plans would take defense spending even lower, to below 3% of GDP.

But Obama isn’t just content with cutting America’s defense spending; he’s cutting the military’s muscle as well:

  • The Navy will have to mothball half of its entire cruiser fleet – 11 vessels, several of them capable of ballistic missile defense. That’s even more than the Navy proposed to lay up previously (7). These vessels will not return to service until there is money to modernize them. The construction of new ships will also see significant cuts.
  • The Navy must also significantly cut the procurement of its crucial P-8 Poseidon and E-2D Hawkeye aircraft, the former needed to protect the US Navy against hostile submarines (esp. those of China and Iran), and the latter to provide airborne early warning, especially to the Navy’s Carrier Air Wings.
  • The Air Force will have to shed its entire fleet of over 300 A-10 Warthog aircraft. With decent armor, air-to-ground missiles, and a hefty 30mm gun spitting thousands of rounds per minute, that aircraft is ideal for close air support, which troops on the ground have always needed and appreciated. No other aircraft can provide that capability. B-52s, B-1s, F-15Es, F-16s, and F-35s are too vulnerable to damage – even to small arms fire – and too fast to ever be effective in that role. Don’t take my word for it. The father of the A-10, Pierre Sprey, who also contributed to designing the F-16, has openly said that, as much as he’s proud of the work he did on the F-16, he would NEVER claim it is useful for close air support.
  • The Air Force will also have to retire its entire fleet of U-2 spy planes, which, despite being older, can fly higher, have far more powerful aperture and more diverse sensors, and thus much better intel gathering capability, than the drones supposed to replace them (Global Hawks). It will also lose more F-15 air superiority fighters.
  • The Army will have to cancel its Ground Combat Vehicle program (intended to replace the seriously-deficient Bradley infantry fighting vehicle), and the Marines will lose the badly-needed Amphibious Combat Vehicle program, needed to replace the USMC’s Vietnam-War-era amphibious tractors.

The proposed FY2015 isn’t all bad, however:

  • It protects investment in the badly needed Long Range Strike Bomber and KC-46 Pegasus tanker, both of which are crucial to preserving the military’s ability to operate and fight globally.
  • It provides funding to buy more JASSM-ER standoff cruise missiles, which have a range of around 1,000 kilometers and can be launched by any US combat aircraft.
  • It calls for major reforms to the military’s personnel’s pay, pensions, healthcare, and benefits programs, whose costs have gone out of control, and for closure of unneeded bases.
  • It provides funding to harden some of the military’s Pacific bases; to buy more missile interceptors; and to develop a new missile defense kill vehicle and better target discrimination capabilities.

This still does not, however, outweigh the fact that the budget will, overall, weaken America’s defense, which is precisely what Barack Obama wants.

And let’s also recount what isn’t in the budget, but should be:

  • No restart of F-22 Raptor fighter production (killed by Obama in 2009), even though Russia and China have flight-tested, and are developing, a combined of THREE fifth-generation stealthy fighters that will be superior to EVERY fighter on the planet, except the F-22, when deployed later this decade.
  • No major upgrades to the F-15 fleet. Indeed, that fleet, already cut significantly by Obama, will be cut even further!
  • No major upgrades to the F-16 fleet, nor any sale of any F-16s to Taiwan.
  • No restart of the cancelled long-range air to air missile, which will leave US fighters outgunned vis-a-vis aircraft armed with the K-172 Novator.
  • No new AWACS program to replace the USAF’s old E-3 Sentry AWACS aircraft.
  • No funding for any new nuclear weapons – because it doesn’t fit Obama’s fantasy of disarming the US unilaterally.
  • No significant cuts to the DOD’s bloated bureaucracy and army of contractors.
  • No funding for an East Coast missile defense site.
  • No significant funding for alternative airbases in the Pacific or for hardening America’s existing bases in the Western Pacific.
  • No funding for a new ICBM, badly needed to replace the old Minuteman III, first deployed in 1976.

In short, as many conservatives have already stated, Obama’s proposed FY2015 budget would, if enacted, be another step on the way to disarming the US unilaterally, a policy I have warned against my entire life.

« Older Entries Recent Entries »